Good morning ladies and gentlemen and welcome to the Jenko Shipping and Trading Limited 4th Quarter 2024 Earnings Conference Call and a presentation. Before we begin, please note that there will be a slide presentation accompanying today's conference call. That presentation can be obtained from Jenko's website at www.jenkoshipping.com. To inform everyone, today's conference is being recorded and is now being webcast at the company's website, www.jenkoshipping.com. We will conduct a question and answer session after the opening remarks. The instructions will follow at that time. A webcast replay will also be available via the link provided in today's press release as well as on the company's website. At this time, I will now turn the conference over to the company. Please go ahead.

Good morning. Before we begin our presentation, I note that in this conference call, we will be making certain forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use words such as anticipate, budget, estimate, expect, project, intend, plan, believe, and other words in terms of similar meaning in connection with the discussion of potential future events, circumstances, or future operating or financial performance. These forward-looking statements are based on management's current expectations and observations. For a discussion of factors that could cause results to differ, please see the company's press release that was issued yesterday, the materials relating to this call posted on the company's website, and the company's filings with the Securities and Exchange Commission, including, without limitation, the company's annual report on Form 10-K for the year-ended December 31st, 2023, and the company's reports on Form 10-Q and Form 8-K subsequently followed with the SEC. At this time, I would like to introduce John Wilbensmith, Chief Executive Officer of Genco Shipping and Trading Limited.

Good morning, everyone. Welcome to Genco's fourth quarter 2024 conference call. I will begin today's call by reviewing our Q4 2024 and year-to-date highlights. Additionally, we will provide an update on our value strategy, discuss our financial results for the quarter, as well as the industry's current fundamentals before opening the call up for questions. For additional information, please also refer to our earnings presentation posted on our website. Starting on slide five, Q4 2024 marked another solid quarter for Genco, tapping off what was a very good year for the company as we grew earnings and advanced our comprehensive value strategy focused on three pillars, dividends, deleveraging, and growth. Specifically during a time when we continue to provide shareholders with sizable returns and take additional steps to lower our financial risk, we are pleased to have acquired another high-specification Cape Size vessel. In October, we took delivery of the Genco Intrepid, our third Cape Size acquisition over the last year, increasing our investment in modern high-specification vessels to approximately $285 million since 2021. Importantly, the acquisition of the Genco Intrepid is part of our broader fleet renewal strategy. Earlier in the year, we completed our exit from the four smaller and older 169,000 deadweight ton vessels and have redeployed the sale proceeds and additional cash towards the acquisition of three 2016-built capesized vessels. Notably, these accretive transactions enhance our earnings power as we add premium, high-quality assets to the fleet and reduce dry docking CapEx in 2024 and 2025 by $13 million. Turning to slide six, we highlight what was a strong 2024 for Genco. Our EBITDA exceeded $150 million, a nearly 50% increase versus 2023 levels, led by our success, increasing time chart equivalent rates to $19,107 per day from $14,766 the prior year. In addition to the strong market, we continue to outperform our benchmarks, adding approximately $1,600 per day to our TCE rates, demonstrating the continued strength of our commercial platform. Furthermore, we also increase distributions to shareholders by 70 percent declaring a dollar 46 per share in dividends during the year or an annualized yield of 10 percent on the current share price we continue to provide sizable dividends to shareholders as highlighted on page seven we are pleased to advance our track record of providing dividends to shareholders through market cycles as we declared 30 cents per share dividend for the fourth quarter. This marks our 22nd consecutive dividend, which in aggregate represents $6.61.5 per share or 45% of our current share price as of February 18th. Solid fourth quarter dividend follows our recent decision to enhance our dividend policy, which is aimed at increasing cash distributable to shareholders while maintaining significant financial strength to grow and renew our fleet and further strengthen our earnings power. Specifically, we remove the dry docking CapEx line item from the dividend calculation going forward. Turning to slide eight, we believe Genco remains in a highly advantageous position moving forward. Specifically, we have an industry low net loan devalue of 5%, a low cash flow break-even rate, and over $330 million in undrawn revolver availability. Coming off of a strong 2024 dry bulk market, the beginning of 2025 has seen downward volatility in part due to seasonal factors. Despite this near-term softening of freight rates, we remain constructive on the longer-term dry bulk fundamentals, which are led by a moderate new building order book and growth in cargo volumes from long-haul At the same time, given our strong balance sheet, favorable risk, reward balance, and significant access to capital, we built Genco to capitalize on diverse freight market environments to both opportunistically grow the fleet through the dry bulk cycles and continue to provide sizable returns to shareholders. I will now turn the call over to Peter Allen, our Chief Financial Officer. Thank you, John.

On slides 10 through 12, we highlight our fourth quarter financial results. Genco recorded net income of $12.7 million, or $0.29 basic and diluted earnings per share. The adjusted EBITDA for Q4 totaled $32.7 million, bringing the yearly total to $151.2 million, an increase of 49% year-over-year. During Q4, our TCEs increased on a year-over-year basis, led by our Cape-sized vessels, which earned a TC rate of over $25,000 per day during the quarter, or approximately $3,000 per day greater than the same period of last year, highlighting the significant operating leverage of the capesized sector. On slide 13, we showed the trajectory of our debt outstanding and our continued voluntary debt repayments. Over the last four years, we have paid down 80% of our debt for nearly $360 million, which has resulted in a net loan-to-value ratio of only 5%. In 2024 specifically, we voluntarily paid down $110 million of debt under our revolving credit facility, and we estimate that this will reduce interest expense by approximately $6 million on an annualized basis or $400 per vessel per day on our cash flow make-even rate. Voluntarily paying down debt highlights the importance and significant flexibility that our 100% revolving credit facility structure offers us in that we can pay down debt to actively manage interest expense without losing borrowing capacity to capture accretive growth opportunities. Turning to slide 14, we will present a current snapshot of Genco's financial position as of December 31st, 2024. We have a cash and debt balance of $44 million and $90 million respectively, resulting in a net debt position of $46 million and an industry low net loan-to-value ratio of approximately 5% on our 42-vessel fleet. Additionally, we have $337 million dollars of undrawn revolver availability that we can utilize for growth opportunities, among other uses. Moving to slide 15, we highlight our quarterly dividend policy, which targets a distribution based on 100% of quarterly cash flows, thus a voluntary reserve. For the fourth quarter, our formula resulted in a 30 cent per share dividend or an annualized yield of 8%, nearly doubled the two-year treasury rate of approximately 4%. Looking ahead to Q1 2025, we currently have 75% of our available days fixed at a rate of $12,366 per day, as compared to our anticipated cash flow break-even rate, excluding dry docking-related CAPEX, of $8,873 per vessel per day. We note that while Genco, like much of the industry, has a high dry docking year in 2025, we plan to front load these dry dockings during the first half of the year and seek to maximize fleet-wide utilization in the second half of the year, which tends to be seasonally stronger from a freight rate perspective. I will now turn the call over to Michael Ohr, our dry bulk market analyst, to discuss industry fundamentals.

Thank you, Peter. Beginning on slide 17, the dry bulk market experienced a strong 2024 led by the Baltic Cape Size Index, which averaged $22,593 per day. Last year was atypical from a seasonality perspective in the sense that the market was strong from the start of the year and through Q3, but then eased into year-end. So far in 2025 to date, the market has seen traditional seasonal trends return in Q1, such as weather disruptions in both the Atlantic and Pacific basins impacting cargo availability, the front-loaded nature of the new building deliveries, particularly for minor bulk vessels, as well as the timing of the Chinese New Year. Specifically, as highlighted on page 18, due to poor weather conditions and scheduled maintenance, Brazilian iron ore exports have pulled back since the highs of Q3, but January exports approximately 11% lower than the second half of 2024. These These reduced long-haul iron ore trade volumes, together with easing import congestion, have temporarily thrown off the supply and demand balance for the sector, impacting freight rates to the downside. During slide 19, 2024 marked another record year for both Chinese iron ore and coal imports. Iron ore imports grew by 5% year-over-year, some of which replenished inventories. While current Chinese stockpiles are below 2022 highs in absolute terms, these levels are approximately 19 percent higher than this time last year. China's steel production declined in 2024, while steel exports increased by 25 percent, highlighting reduced domestic demand. China continues to export over 10 percent of the steel it produces, mostly going to other Asian nations as well as the Middle East, with its proportion of exports to steel output growing over recent years. China's excess steel has remained a point of contention, inducing protectionist measures globally. Turning to pages 20 and 21, we highlight the long-haul iron ore and oxide trade growth expected from Brazil and West Africa in the coming years. While growth this year is expected to be marginal, there are significant growth volumes expected in 2026 and 2027 which can absorb over 200 capesized vessels, which is more than the current capesized new building order book. Fly constraints and capesized new building activity combined with added longer long-haul trading distances are two key catalysts for the sector. As depicted on slide 22, the Trump administration has initiated and threatened tariffs across a wide range of trade partners since the inauguration in January. Many of these tariffs, such as the blanket 25% levies on Canadian and Mexican imports, have been delayed. However, the U.S. has implemented a 10% tariff on all Chinese imports, prompting China to impose 15% duties on U.S. coal and LMG, as well as 10% on crude oil and agricultural equipment. Additionally, President Trump has announced that he plans to institute a 25% tariff on all steel and aluminum imports, regardless of origin. So far, the new tariff regimes have had a generally limited impact on global drywall trade. However, the tariffs have been more aggressive than what we witnessed in the first Trump administration, as they are being implemented in a broad-based manner on multiple trade partners simultaneously. In terms of the grain trade, as detailed on page 23, which was impacted by the first U.S.-China trade war, we are currently entering South American grain season. Following a strong U.S. harvest, expectations are for another bumper year for both Brazilian and Argentine shipments, which should be supportive for minor bulk trades. During February so far, we've seen supermax spot rates increase by approximately 40% in part due to these dynamics. Moving to slide 24, the disruptions in Panama and the Red Sea have gone in different directions. Since February 2024 low, drive bulk Panama Canal transits have increased over 200 percent and are back to near average levels. On the other hand, despite a tenuous Gaza ceasefire, Suez Canal transits are still well below normal levels and are likely to remain at lower levels in the near term until further steps are taken in the ceasefire agreement. Regarding the supply side outlined on slide 25, net fleet growth for 2024 was 3% in line with the previous year. The cape size segment continues to have the smallest order book among the sectors, with only two capes delivered in January, the least amount of January cape delivery since 1999. There are currently only 36 more cape deliveries expected this year. While we expect volatility in the freight market, the foundation of a low supply growth picture provides a solid basis for our constructive view of the dry bulk market going forward. This concludes our presentation, and we would now be happy to take your questions.

Okay, thank you, ladies and gentlemen. We will now conduct the question and answer session. If you'd like to ask a question this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. And your first question comes from the line of Amar and Nocta, which effort is Amar? Please go ahead.

Morning, John, Peter, Michael. Good update. Just on the morning. Yeah, just overall, I think, you know, just looking at, you know, the release and obviously the market is what it is, but just in terms of Genco, clearly you're in strong shape, maybe the strongest you've ever been. LTV is at just 5%, as you highlight. Liquidity is pushing close to $400 million. in. How do you think about where you're positioned right now? You know, how the dry book market has developed here recently? And how do you think Genco is going to be here in terms of opportunities that may be coming up, especially given the softer market of late?

Yeah, thanks, Omar. So, look, this plays right into how we set this company up two and a half, almost three years ago with the value strategy. And what I mean by that is we wanted to put the company in a position where it can always play offense. And clearly, you've seen that happen in 2024 with large dividend payouts due to the favorable cash flows, the fleet renewal that we were still able to do and 2024. And as we look at 2025, while it may be, from a rate standpoint, softer than 2024, we believe that that is going to allow us to acquire additional vessels at lower prices, particularly focusing on eco-type capes and ultramaxes. So, again, I just go back to, this is what we set this company up for, to thrive in all freight environments. And while we maybe have a little softer situation in the first part of this year, we think that'll breed opportunity for the company to grow. And with a 5% net debt, we can do that extremely easy without sacrificing anything on the dividend side.

Okay. Thanks, John. That's nice to hear and obviously nice to be able to play offense in a market like this. And I guess maybe just on that your last point on the dividend, your payout policy is pretty simple. You pay out operating cash flow less than that 19 million reserve. How do you think about the setup here for the first quarter? Earnings may be slipping in the red just given the low spot rates. How do you think about what the dividend would be in that, you know, with that dynamic?

Yeah, and certainly this question, comes up, I think, so first of all, we're very much committed to the value strategy, which includes quarterly dividends. As you pointed out, that formula is very straightforward, and there's a very, again, straightforward strategy on that. Definitely downward volatility in the first quarter, but I think all you have to do is go back and look at our track record of dividends during previous periods of softness, even when at the time the formula would have produced, you know, a zero dividend, Q1 2023, Q3 2023, you know, the formula spit out a zero during those quarters, but we still elected to pay 15 cents a share. So we've, you know, I think there's a very defined track record now in terms of what the board and the management team and the company, their commitment to the value strategy. You pointed out the quarterly reserve. It actually works out to about 45 cents a share. So there's quite a bit of reserve on a short-term basis to tap as needed. Doesn't mean we're going to pay out the whole reserve, but it certainly gives us a lot of flexibility to counteract short-term volatility in the freight markets, which is exactly what we believe is happening right now. So it's, again, it's, I just go back to the same thing. It's about playing offense, Amar. We've set this company up to continue paying decent-sized dividends, even in, you know, even in periods where we have softness in rates, and growth is very much a factor still for us. Got it.

Great. Oh, thanks, John. Very helpful. I'll turn it over. Thanks, Omar.

And your next question comes from the line of Chris Robertson with Deutsche Bank. Chris, please go ahead.

Hey, good morning, guys, and thank you for taking my questions. Just with regards to pulling the dry docking forward, you're not the only public player that's trying to front load this year just due to the raid environment. And I'm assuming other private players are doing so as well.

Additionally, there's a large portion of the fleet that was built in 2010 that has to do special surveys and undergo dry docking this year so do you see any potential for i guess upside as effective capacity of the fleet is reduced because everyone's trying to rush to the yard um maybe a little bit i i i actually think that that's being made it's it's being made a little bigger than than it actually is i i believe actually next year is is an even larger dry docking year um if you look at the fleet overall. In terms of what Genco is doing, we're not necessarily pulling things forward in 2025. And we obviously have a set regulatory schedule in terms of when we need to do our dry dockings. But we certainly try to pull things forward as much as we can in the earlier part of the year to make opportunity costs as low as possible on dry dockings, particularly this quarter when we're having you know the normal seasonal softness but i'm not so sure how much of a factor it is this year but as i you know again next year is even heavier so maybe we start to see it um as we get into next year okay gotcha all right um my second question is just as it relates to the suez canal transit um john could you talk about which segment of the dry book sector this impacted the most?

And what do you think normalization in the Suez means for overall decrease in ton mile demand, if that were to normalize?

I don't think it's very much in dry bulk. Maybe it's 1%. I can tell you, Genco as a company has no plans at this point to, you know, to transit the Red Sea area. We will continue to go around Africa for at least the near term as we see it. We still think it's a very volatile situation there. And the last thing you want is to have a ship and crew, everything looks good one day, and all of a sudden you're in the middle of the Red Sea and you can't turn around and, you know, the world blows up again and you have a tax. So for the time being, we're staying away. I think a lot of other ship owners are, clearly not everyone, but it's not a risk that we want to take with our ship and crew.

Yeah, it's smart for the crew, safety especially.

All right, guys, thank you for the time. I'll turn it over.

Thank you.

Again, if you'd like to ask a question, see the press star followed by the number one on your telephone keypad. And your next question comes from the line of Sharif Al-Maghrabi with BTIG. Sharif, please go ahead.

Hey, good morning. Thanks for taking my questions. So a couple on the market. When we look at the time chider market, recent fixtures by some other owners are showing a bit of a bifurcation between vessel classes. Capes aren't too far below where the Liberty and the Endeavor are fixed, but smaller vessels are a bit lower. First, I'm wondering what's behind the relative strength in capes, even as the spark market goes through this sort of seasonal and weather impacted slump.

So I'm a little confused because, you know, one year TC rates on capes are definitely below 20 at this point. So they have been pushed down, you know, just like every other market. um on the on the smaller ships as well as the larger ship so they they've definitely seen that downward pressure because of where spot rates are and a lot of times that cape one-year tc gets priced somewhat off of you know the the the daily ffa curve because i think you know in in that market that ffa those ffas are being used more so than in the uh in the mid-sized vessels okay yeah it could be that some of the fixtures i saw were for more than a year or so um maybe

that's a driver but shifting to my second question um the iron ore and bauxite expansions you highlighted on slide uh slide 20. uh yeah you know for context the tanker trade at the last couple years we've seen some important refineries come online but the ramp the full production has taken a year or more so for these three iron ore and bauxite projects do you have a sense of how the cadence of those 167 tons should start making an impact in the dry bulk trade sure so i would call it an educated guess um you know i i would tell you you'll see full ramp up as we get into 2027 and 28 they certainly have indicated you know shipments by the end of this year

i don't believe those are going to be large shipments i might i think they'll be more symbolic that it's up and going more than anything else and then a real ramp up should begin as you get into the second half of 26 and then 27 and as i said by the time we get into early 28 you should have that full run rate um of 120 million tons that's helpful thanks very much for the color yeah you're welcome and you know don't don't lose sight of the fact as well that you know you've got you've got growth from valet as well that's going to come a little sooner that's obviously still a long-haul trade and we still have growth on the bauxite side um you know at least through 26 and probably into 27 as well, coming out of West Africa and going east.

And your next question comes from the line of Beau Fratt with Alliance Global Partners. Beau, please go ahead.

Hey, good morning, John. Comprehensive presentation as always. Can you just talk about the play between buying assets? You're talking about growth. you're clearly emphasizing gross buying modern tonnage and when you compare that to you know buying your own stock um you know you're in the market you're probably not going to be able to get a huge discount to nab you're going to pay market prices for all intents and purposes but conversely you can go into the open market and buy your own stock at a pretty good discount to NAB. Can you just talk about how you assess those different opportunities?

Sure. First is, we're a shipping company, and we make money by buying ships and operating them and using those cash flows to continue to pay down debt, generate ROIC, and most importantly, return dividends to shareholders. So I think it comes down to a question of, is it dividends or share buybacks? We have done a tremendous amount of work on share buybacks. We have not seen them work in shipping in any sector as a whole. We do believe returning money to shareholders in the form of dividends is a better way to go. And when I look at share buyback programs that have been done this year, with the exception of one company, our TSR is actually better than the companies that have been formed share buyback. So we fundamentally believe the best way to generate shareholder returns is through dividends. The shipping side, again, Poe, we're a shipping company. We need to continue to grow our fleet and cash flows to generate ROIC.

That's good. So no change in your, you know, previous, you know, your historic opinion on stock buybacks. Can you just talk about the reserve in the presentation, you know, you still have for the first quarter, that full reserve, where, you know, does it make sense at this point in time, you're already 72% covered, you know, called 12,000. And, you know, clearly you're not going to, you know, generate a significant dividend in the first quarter, at least according to, you know, my calculation. So why not flex down to the reserve right now instead of waiting until next quarter when you report?

Look, I think it's, again, I think it's just about being consistent, Poe. You know, we give the guidance, you know, a quarter forward. And I agree. I'm not sure what the actual formula will spit out, but we definitely had a soft first quarter across the industry. But, again, we have that reserve that we can flex and use to smooth out quarterly dividends as we've done in the past. And, you know, I can't say it enough. We're committed to the quarterly dividends and the value strategy, and I think it's working extremely well. I'm not sure if most companies will even have the ability to do that in the first quarter and pay a dividend.

Understood. And, John, you implied, you know, based on your history that, you know, the minimum level of the dividend should, you know, at least I heard 15 cents a quarter. Is that something we should sort of build into expectations or is that did you not mean that?

Well, I didn't address it, though. I addressed that we had $0.45 per share of reserve to have as optionality in terms of what the board and the management team put forward as the dividend. I've certainly pointed to past history, but in terms of a decision that's been made yet, no. we we want to get through the first quarter we want to see what the cash flows are um we've obviously as well this is as as i said earlier on the call it's a heavy dry docking year which is why we took out the capex uh minus out of the out of the formula going forward um because we have such a very very strong balance sheet and we still have positive fundamentals on the market.

Sounds good. Thanks for taking my questions, John. Thank you, Pope.

As there are no further questions at this time, this concludes your conference call for today. We thank you for participating and asks you to please disconnect your lines.